Natalia Vander Laan
The brunt of stressors related to the management of a lost loved one’s estate falls on the grieving family. There will always be matters to tend to after a death in the family, but a lengthy, expensive, and public probate process should not be one of them. Proactively engaging in estate planning prior to one’s passing can alleviate those burdens.
The meaning of the word “estate” is not limited to a mansion with luxury cars. Legally speaking, “estate” is all the property owned by an individual at the time of death. So, a person’s estate typically includes a home, bank and investment accounts, retirement accounts, vehicles, and personal property such as furniture, jewelry and sentimental keepsakes. As the term “estate” does not mean only expensive assets, similarly, estate planning is not only for the wealthy. In fact, even when the estate is modest, having an estate plan that allows beneficiaries to avoid the expensive cost of a lengthy probate proceeding is a financially sound option.
Estate planning involves making arrangements for one’s incapacity and death as well as leaving instructions on how one’s property should be distributed after death. Good estate planning incorporates instructions for the health-care agent in the event of physical or mental incapacity; authorization for the financial agent to manage one’s assets during incapacity; funeral arrangements; provisions for the payments of debts and liabilities; naming a guardian for minor children or disabled persons; and arrangements to minimize estate taxes, attorney’s fees, and court costs.
Everyone’s estate plan is different. However, the essential components of estate planning are similar. A good estate plan includes either a will stating who will inherit the deceased’s property and identifying the executor of the estate during the probate process, or, if one owns real estate, has multiple beneficiaries, or wishes to include special restrictions on the distributions of the assets or wishes to address the needs of minors or persons with special needs, a living trust. An important part of the estate plan that includes a trust is assigning assets into trust in order to ensure that the wishes expressed in the trust control the distributions of one’s assets. Finally, a good estate plan includes both a health power of attorney authorizing a designated person to make healthcare decisions and end-of-life treatment decisions on behalf of an incapacitated person and a financial power of attorney authorizing a trusted person to manage the financial affairs of an incapacitated person.
In addition to those essential components, there are optional items such as funeral arrangements, separate dispositions of personal property, property agreements between spouses, and even very specific trusts intended to provide tax planning.
Most people understand the need for an estate plan but oftentimes wait until it is too late. The most common reason for delay is the concern that the process will be too expensive. However, the essential documents can be completed at a reasonable cost. If needed, the optional documents can be completed later. Regrettably, the need for an estate plan is often ignored or the documents remain incomplete, causing additional distress to the deceased’s loved ones.
In today’s world, it is tempting to prepare an estate planning portfolio yourself or online. The incorrect online or self-prepared estate plan is a costly mistake. It is often more expensive to revise improper documents than to have an estate plan created by an attorney to begin with. Furthermore, the litigation ensuing over the misinterpretations and errors is even more expensive and can damage delicate family relationships. It is worth it to get your estate plan done right the first time by an attorney.
Natalia Vander Laan is a Minden attorney.
